The problem appears to be that the rebate program requires customers to enroll in a variable pricing program. The program charges more for electricity during peak times than during periods of low demand. These higher prices means that people have to build a large enough system to cover all their electricity needs during those peak hours or risk making their investment uneconomical due to the increased cost of the electricity (though less is purchased overall).

Their electricity prices are stunningly high, with peak residential charges more 3 times higher than ours. Compare that with recent claims that businesses will flee MN if the cost of electricity rises by a few cents per kilowatt-hour (claimed during committee hearings around the climate change bill). Seems to me that California remains an economic powerhouse despite its high energy prices. It also conserves far more electricity than any other state.

I'm a supporter of time-of-day pricing. I think people should understand the impact of their energy usage - if they want to use lots of electricity during high demand, they should pay extra because that usage stresses the system far more than during periods of low-medium demand. The grid has a limited capacity and increasing that capacity is costly. Perhaps we can delay investments to increase the capacity of the grid by forcing people to pay for their usage.

However, pushing more usage to low demand periods will likely increased coal-based generation. That is why I think the variable pricing system should heavily encourage renewable energy with an artificial floor. Thus, the price of electricity would not drop below $.08 per kilowatt-hour regardless of demand unless there was a lot of wind on the grid at the time. As this floor would generate excess profits, that money could be diverted into conservation funds or revolving loan programs to encourage renewable development.